Robo-advice tipped to disrupt market

Automated investment services will increase in popularity in the next three to five years, which will “confront some traditional advice methods”, ETF Consulting has anticipated.

ETF Consulting managing director Tim Bradbury said its analysis of automated investment advice technology - or 'robo-advice' - found it has the potential to attract many more clients to seek advice assistance, which will impact the financial services industry.

“This type of business will polarise and confront some traditional advice, trading and wealth businesses – that is only natural,” he said.

“Change is inevitable and this technology has the potential to attract many more investors to seek some advice assistance,” Mr Bradbury said.

Automated investment services will provide opportunities for clients to meet their needs, he said, including investors looking to outsource investments or clients who are experiencing poor service and engagement from incumbent advisers.

“There will always be clients who want a more personal and traditional relationship and are looking for professional help to guide them through complex stages of their lives. Conversely, there will always be advisers with good relationship and engagement skills to meet this need,” he said.

However, in an article for ifa recently, Audere Coaching and Consulting founder Stewart Bell said while some advisers see automated advice as a threat, these tools may ultimately present an opportunity, helping businesses to achieve economies of scale.

In addition, a poll conducted by Gallup in the US last week found that a majority of investors have indicated a preference for traditional advice over the robo-advice trend.